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Foreign investors have withdrawn nearly Rs 20,000 crore from Indian stock markets in just five trading days (November 4–8), continuing a trend of large-scale selling that began last month. Experts say investors are now moving their money to China, largely due to the high valuations presently prevailing in Indian markets. In early November, FPIs have offloaded as much as Rs 19,994 crore in Indian markets. The month prior, i.e., October, was one of the worst months in terms of foreign outflows, with FPIs making a net withdrawal of Rs 94,017 crore. Before this, Indian markets faced such a situation during the pandemic, when FPIs withdrew Rs 61,973 crore from equities in March 2020. <h2>Why Are Investors Leaving? </h2>According to Himanshu Srivastava of Morningstar Investment Research India, two main factors are driving this exodus. First is China's renewed appeal due to lower stock valuations and new economic stimulus measures. In a bid to nudge the domestic economy and bail state governments, China recently approved a 10-trillion yuan (US $1.4 trillion) package. Per reports, approximately 60% of this stimulus focuses on allowing local governments to refinance the mountain of debt on them. Srivastava explains foreign investors are also flocking to US dollar and Treasury yields, which have appreciated significantly in the recent past, leading FPIs to anticipate a stronger US economy going ahead. Moreover, high valuations in Indian markets are discouraging foreign investors from putting more money in the economy. As a result, over the past week, the selling pressure eroded Rs 74,563 crore in market value for Reliance Industries, while Bharti Airtel and ICICI Bank lost Rs 26,274 crore and Rs 22,254 crore, respectively. The combined market valuation of six of the top 10 most-valued firms dipped by Rs 1,55,721.12 crore last week. <h2> Silver linings</h2>Despite the ongoing outflux of funds since last month, November also saw unprecedented applications of about 40–50 new FPI registrations, which are eyeing to enter the Indian market. This was due to markets SEBIs recent relaxation to NRIs, permitting them to participate up to 100% and announcing measures for ease of entry and operations in India. On the other hand, FPIs invested Rs 599 crore in the debt general limit and Rs 2,896 crore in the debt voluntary retention route (VRR) during the period under review. So far this year, FPIs have invested Rs 1.06 lakh crore in the debt market. <li class="whitespace-normal break-words"></li>Going ahead, investors will be looking for certain macroeconomic cues, which include corporate earnings reports, India's inflation (CPI) and industrial production (IIP) data on November 12, the US inflation report on November 13, and wholesale price index (WPI) data on November 14.

FPIs withdraw nearly Rs 20,000 crore from equities in the last 5 trading sessions, make a beeline for China and US

New Delhi: <keyword id="19900795" type="General" weightage="20" keywordseo="foreign-investors" source="keywords">Foreign investors</keyword> pulled out a massive Rs 94,000 crore (around USD 11.2 billion) from the Indian <keyword id="19925636" type="General" weightage="20" keywordseo="stock-market" source="keywords">stock market</keyword> in October, making it the worst-ever month in terms of outflows, triggered by the elevated valuation of domestic equities and attractive valuations of <keyword id="20295104" type="General" weightage="20" keywordseo="Chinese-stocks" source="keywords">Chinese stocks</keyword>. Before this, foreign portfolio investors (FPIs) withdrew Rs 61,973 crore from equities in March 2020. The latest outflow came after a nine-month high investment of Rs 57,724 crore in September 2024. Since June, FPIs have consistently bought equities after withdrawing Rs 34,252 crore in April-May. Overall, FPIs have been net buyers in 2024, except for January, April and May, data with the depositories showed. Looking ahead, the trajectory of global events like geopolitical developments, interest rate movements, progress in the Chinese economy and the outcome of the US Presidential election will play a crucial role in shaping future foreign investment in <keyword id="20014814" type="General" weightage="20" keywordseo="Indian-equities" source="keywords">Indian equities</keyword>, Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, said. On the domestic front, key indicators like inflation trajectory, corporate earnings, and the impact of festive season demand will also be closely watched by FPIs as they assess opportunities in the Indian market, he added. According to the data, FPIs recorded a net outflow of Rs 94,017 crore in October. The intensity of net outflows could be gauged from the fact that except for one day, FPIs were net sellers throughout the month, bringing their total investment for 2024 down to Rs 6,593 crore. This relentless selling resulted in about an 8 per cent decline in benchmark indices from their peaks. Several factors contributed towards this massive withdrawal of foreign capital from the Indian equity markets in October. The major among them is the elevated valuations of Indian equities. This has triggered a shift in investments towards China, where valuations are currently more attractive. Additionally, a series of stimulus measures, aimed at bolstering Chinese economic growth has made Chinese equities increasingly appealing to global investors, Srivastava said. Despite the massive FPI selling in financials, this sector is resilient since the valuations are fair and every selling is being absorbed by DIIs and individual investors, particularly HNIs, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said. In addition, FPIs pulled out Rs 4,406 crore from the debt general limit and invested Rs 100 crore from the debt Voluntary Retention Route (VRR) during the period under review. So far this year, FPIs invested Rs 1.06 lakh crore in the debt market.

FPIs withdraw record Rs 94,000 cr from Indian equities in Oct on attractive Chinese valuations

Foreign Institutional Investors (FIIs) have been rapidly exiting Indian markets, and this high-speed exodus does not look like it will stop anytime soon. In October 2024, FIIs withdrew Rs 1,14,445.89 crores from Indian markets. Yesterday, FIIs withdrew $770.67 million from the markets, with equity outflows of $440.86 million and debt outflows standing at $327.44 million across various categories. Per NSDL data, hybrid outflows amounted to $2.31 million. While this may sound dissuading at first, a recent SBI report underlined that FIIs still hold a massive $ 18.241 billion in Indian markets. So far, FY25 has seen FII inflows worth $ 8.924 billion. However, the situation may quickly turn alarming as well, given that FII holdings in Indian equities have already come down to a 12-year low. Says Anirudh Garg, Partner and Fund Manager at Invasset PMS, "The current valuation of Indian stocks, trading at around 24 times expected earnings, appears high compared to Chinese stocks, which are at approximately 10 times. Economic concerns, including weak corporate earnings and declining consumer demand, further exacerbate this situation. Additionally, renewed fears of inflation and potential monetary tightening by central banks have led FIIs to withdraw from the Indian market." In the meantime, DIIs (domestic institutional investors) are stepping in big time. During October 2024, DIIs infused Rs 1,07,254.68 crore in Indian markets. In November so far, DIIs have been keeping the fund momentum going, infusing Rs 12,265.74 crore in India, while FIIs have offloaded Rs 16,445.49 crore this month. But despite this strong uptick, SBI's recent report suggests that consumer confidence in India remains below 100, signaling muted positivity and optimism in the economy. While household consumption is gradually recovering, it grew at 4% last year, much below the 7% levels recorded pre-pandemic. <h2>FII share in <keyword id="20868945" type="General" weightage="20" keywordseo="NSE-listed-companies" source="keywords">NSE-listed companies</keyword> takes a dip, DII stake rise </h2>FIIs share in NSE-listed companies stood at 15.98% in October, with assets under their custody in the equity segment coming to Rs 71.08 lakh crore last month. In September, this stood at Rs 77.96 crore. Experts suggest that this is likely to continue for some time to come. Mutual funds, on the other hand, saw their share in NSE-listed companies hit a record high of 9.58%, as opposed to their 9.32% stake in September 2024. FIIs turned net sellers in the debt segment as well in October, dumping $771 million in Indian markets. This comes after 2 consecutive months of healthy inflows in this segment in August and September 2024, where the figures stood at $2,806 million and $2,295 million, respectively.

FII stake in Indian equities dips to a 12-year low

In early Wednesday trading, the Indian rupee slid 14 paise to hit an all-time low of 84.23 per US dollar, weighed down by continued outflows of foreign funds and a robust US dollar in global markets. Forex analysts highlighted the volatility stemming from the ongoing US elections, suggesting that stability could return once results are clear in this close race. The US Federal Reserve is also on the radar, with an anticipated interest rate cut this week and a projected easing of up to 100 basis points by 2025. At the interbank forex market, the rupee opened at its historic low of 84.23 against the dollar, down from its previous close of 84.09. On Tuesday, the currency had ended slightly stronger, gaining 2 paise. Meanwhile, the dollar index, which tracks the strength of the US dollar against six major currencies, climbed 1.64% to 105.11. According to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, the index rose following initial election results showing former President Trump ahead, with the Republican party also leading in both the Senate and the House of Representatives. The global oil market saw movement as Brent crude prices dipped 0.98%, trading at USD 74.79 per barrel. Bhansali noted that the rupee’s trajectory will heavily depend on the Reserve Bank of India’s (RBI) response, particularly as the currency fluctuates with real-time election outcomes. He estimated an intra-day trading range between 84.00 and 84.35. On the domestic front, Indian stock markets showed positive trends. The Sensex climbed by 390.93 points (0.49%) to reach 79,867.56, while the Nifty rose by 135.60 points (0.56%) to 24,348.90. Despite these gains, foreign institutional investors (FIIs) were net sellers on Tuesday, pulling out Rs 2,569.41 crore from the capital markets, as per stock exchange data. This withdrawal underscores the challenges facing the Indian currency amid global financial uncertainties. (with PTI inputs)

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FPIs withdraw nearly Rs 20,000 crore from equities in the last 5 trading sessions, make a beeline for China and US

BI India Bureau

FPIs withdraw record Rs 94,000 cr from Indian equities in Oct on attractive Chinese valuations

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FII stake in Indian equities dips to a 12-year low

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Rupee hits record low of 84.23 against US dollar amidst US elections 2024

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